1. Compliance & Ethics
Professional
®
a publication of the society of corporate compliance and ethics www.corporatecompliance.org
May
2016
Meet Jay Martin
Vice President Chief Compliance Officer
Senior Deputy General Counsel
Baker Hughes Incorporated
Houston, TX
41
The 3 Cs of
business resumption
John J. Graham and
Cris Mattoon
37
China’s anti-corruption
crusade: A global
company’s guide
Nadine Tushe
27
The role of
compliance and ethics
in company culture
Frank Ruelas
31
Ethical dilemmas:
Making responsible
choices
Muna D. Buchahin
See page 14
This article, published in Compliance Ethics Professional, appears here with permission from the Society of Corporate Compliance Ethics. Call SCCE at +1 952 933 4977 or 888 277 4977 with reprint requests.

2. +1 952 933 4977 or 888 277 4977 www.corporatecompliance.org 37
ComplianceEthicsProfessional®
May2016
FEATURE
U
ntil recently, China was known
much more for staggering
rates of economic growth
than for rule of law. Today, growth
rates have slowed, and businesses are
turning to new statistics: enforcement
actions as part of President
Xi Jinping’s national Anti-
Bribery and Anti-Corruption
(ABAC) campaign. Before
taking office in 2013, Xi
vowed to crack down on
both powerful “tigers” and
low-ranking “flies.” The
campaign has led to more than
100,000 indictments for corruption,
with a powerful effect both on Xi’s
popularity and the country’s business
environment.1
Knowing the following
key points can help companies take an
informed rather than alarmist approach
to the momentum building behind
ABAC enforcement in China.
The campaign is not targeting the
private sector
The ABAC campaign has some in the business
community nervously recalling Russian
President Vladimir Putin’s crusade against
the Russian oligarchs. Such comparisons,
however, are largely unfounded. Xi’s
efforts, while certainly a watershed for the
business environment in China, are not
necessarily a cause for alarm for executives in
private businesses.
China’s anti-bribery anti-corruption
(ABAC) campaign is largely focused on the
public sector. Business leaders who have
China’s anti-corruption
crusade: A global
company’s guide
»» Chinese president Xi Jinping has embarked on a landmark anti-graft campaign, yielding more than 100,000 indictments
for corruption since he took office in 2013.
»» The campaign is largely focused on state-affiliated enterprises rather than private firms. Foreign companies should
tread carefully, but they are unlikely to be unfairly targeted.
»» Recent amendments to the Chinese Criminal Law will allow for more rigorous prosecution of bribery and related crimes.
»» The actual effects of these efforts on corruption levels in China, however, are unclear.
»» Expect US and Chinese enforcement authorities to increase coordination of anti-corruption enforcement.
by Nadine Tushe
Tushe Before taking office in 2013,
Xi vowed to crack down on
both powerful “tigers” and
low-ranking “flies.”

3. 38 www.corporatecompliance.org +1 952 933 4977 or 888 277 4977
ComplianceEthicsProfessional®
May2016 FEATURE
come under fire are mostly senior managers
of state-owned enterprises (SOEs), not
private firms.2
Virtually all of those named
in legal actions are also important figures
in the Communist Party, suggesting there
are political as well as economic reasons
for many of the arrests.3
Although private
foreign companies of course cannot expect
to act with impunity, they can take comfort
that they are less likely than their SOE
counterparts to be the targets of Chinese
authorities.
Legal reforms signal
commitment to
lasting change
Whatever Xi’s political
motivations for bribery
prosecutions, parallel
legal reforms suggest
commitment to long-
term change in China’s
posture towards
corruption. A series of
amendments to the Chinese Criminal Law
took effect on November 1, 2015. In the area
of anti-corruption, the amendments:
·· Criminalize bribery of close relatives of
current and former state functionaries
·· Add monetary penalties for corruption-
related crimes
·· Raise the bar for bribe-givers to be
exempted from punishment
·· Revise sentencing standards for
embezzlement convictions4
The overall effect will be a more
expansive definition of bribery with
generally more stringent punishments. This
change to the legal framework suggests that
declining tolerance for corrupt behaviors
will last beyond Xi’s presidency.
Observers should note that unlike
escalating application of the United States’
Foreign Corrupt Practices Act (FCPA) to
bribery abroad, Xi’s campaign has thus far
focused on conduct within China. Unlike
other global heavyweights, including the
United States, United Kingdom, Russia,
South Africa, and Brazil, China is not a
signatory to the Organization for Economic
Cooperation and Development (OECD)
Anti-Bribery Convention and has made no
international commitments to controlling
corruption by its companies abroad.
Actual effects
on corruption
are unclear
There is anecdotal
evidence suggesting
that Xi’s crackdown
has resulted in a
cleaner business
environment.
The Economist
quoted a Chinese
property tycoon’s
assessment that Xi’s message was so
clear that, “You can’t even give a bribe
these days.”5
If true, this would be only
good news for foreign companies, many
of whom are already subject to other
high-stakes laws against foreign bribery
such as the FCPA. A lower incidence of
bribery would mean a more predictable
business environment with fewer
compliance pitfalls.
Unfortunately, however, the
most prominent corruption metric,
Transparency International’s Corruption
Perceptions Index, does not support this
conclusion. From 2013 to 2014, even as
Xi’s ABAC campaign picked up steam,
China’s perceived corruption score showed
a marked decline. The score showed only
minimal improvement in 2015, moving
from 36 to 37 out of a possible 100 points.6
The Economist quoted
a Chinese property
tycoon’s assessment
that Xi’s message was
so clear that “You
can’t even give a bribe
these days.”

4. +1 952 933 4977 or 888 277 4977 www.corporatecompliance.org 39
ComplianceEthicsProfessional®
May2016
FEATURE
In such an unclear and rapidly evolving
business climate, companies may need
experienced local partners to ensure that
their compliance programs evolve as
quickly as the regulatory
and enforcement
environment
around them.
Beware of synergy with
US law enforcement
Even though foreign
companies are not
bearing the brunt of
China’s ABAC campaign,
the long arm of the FCPA
is not hesitant to extend
to corrupt dealings in China. Indeed, China
ranks second only to Nigeria in generating
FCPA enforcement actions.7
In one example
from October 2015, US pharmaceutical
manufacturer Bristol-Myers Squibb paid
$14 million to resolve charges that its joint
venture in China exchanged cash and
other benefits for prescription sales at state-
owned and state-controlled hospitals.8
What’s more, US and Chinese
enforcement authorities are operating with
increasing synchronicity. Investigations
focusing on the pharmaceutical industry
in 2013, first by the United States and then
by China, marked the first time that China
echoed an ongoing FCPA investigation
and led to several high-profile convictions
of Western companies in China.9
In
September 2015, the United States and
China formally agreed to increase
cooperation in preventing corruption,
suggesting that this may only be the
beginning of parallel enforcement actions
in the two nations.10
The real pitfall for companies with
global operations is that there is no
international concept of “double jeopardy.”
The same conduct could potentially lead
to massive fines in multiple countries.
With such potentially devastating
consequences, the preferred outcome is, of
course, to maintain
strong compliance
with the laws of
both countries.
Conclusion
Leaders at global
companies can feel
relieved that Xi’s anti-
corruption campaign,
however momentous,
is not intended
to target them.
Nonetheless, the heavy presence of state-
owned companies that may be caught up in
the storm and the continued prevalence of
bribery in all transactions continue to make
China a country of high risk as well as one
of great rewards. With a strong and agile
compliance program, companies can position
themselves to receive only the upside of
greater collaboration between the Eastern and
Western superpowers. ✵
1. See “Robber barons, beware,” The Economist, October 24, 2015.
Available at http://bit.ly/robber-barons-beware
2. Id.
3. Jamil Anderlini: “China corruption purge snares 115
SOE ‘tigers’” Financial Times, May 18, 2015. Available at
http://bit.ly/china-corruption
4. Eric Carlson and Ping An: “China amends its Criminal Law: Impact
on anti-bribery enforcement” The FCPA Blog, September 1, 2015.
Available at http://bit.ly/china-amends
5. Ibid., Ref #1
6. Euan McKirdy: “China slips down corruption perception index,
despite high-profile crackdown,” CNN, December 3, 2014. Available
at http://bit.ly/china-slips
7. Infographic, “Enforcement of Anti-Bribery and Anti-
Corruption Legislation Globally” Thomson Reuters. Available at
http://bit.ly/anti-bribery-enforcement
8. Bristol-Myers Squibb Co., SEC Rel. 76073 October 2015. Available at
http://bit.ly/sec-bristol-myers-squibb
9. Lisa Prager and Lara Covington: “U.S., China enforcement crossfire
creates new risks” The FCPA Blog, October 18, 2013. Available at
http://bit.ly/prager-covington
10. See, e.g., Mary Alice Salina: “US, China Agree to Cooperate on
Fighting Corruption, Terrorist Financing,” Voice of America,
September 26, 2015. Available at http://bit.ly/us-china-agree
Nadine Tushe (nadinetushe@gmail.com) is an Anti-Bribery Anti-Corruption
(ABAC) Compliance Consultant at STEELE CIS in Washington DC.
Leaders at global
companies can feel
relieved that Xi’s anti-
corruption campaign,
however momentous,
is not intended to
target them.